HCI
HCI Group, Inc.
$157.79
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 41.7% below fair value
You pay
$157.79
Bear
$172.12
Fair
$270.64
Bull
$270.64
Bear
$172.12
+9.1%
ROTCE 20.0% → 2.54x TBV
Fair
$270.64
+71.5%
ROTCE 25.0% → 4.00x TBV
Bull
$270.64
+71.5%
ROTCE 30.0% → 4.00x TBV
Key Value Driver
ROTCE (30.6%) vs. cost of equity (10.3%)
Implied Market Multiple
2.06x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $126.50 from 14 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $270.64 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Wall Street's average price target is $126.50 (from 14 analysts). Our estimate is 142% above the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly